Monday, March 19, 2007
New York Times Investigation of Shrine
A major investigation into financial improprieties within the Shrine was splashed across the New York Times this morning.
• Only 2 percent of the Shrine hospitals’ operating income comes from money raised by Shrine temples and members’ dues. (The bulk is supplied by the hospitals’ $9 billion endowment.)
• A top Shrine official told a meeting of temple treasurers that poor accounting for cash coming into the organization was “an increasingly common problem,” and that more than 30 temples had discovered fraud — like theft of money and inventory, altered bank statements, padded payrolls and fake invoices — amounting to as much as $300,000 and involving members of their “divans,” the five-member boards that govern each temple.
• In Texas alone, at least four of the state’s 13 temples have lost money to theft, embezzlement and faulty accounting over the last five years, according to several Shriners there.
• In one of the rare cases where the Shrine prosecuted wrongdoing, the Zem Zem temple in Erie, Pa., accused a former top official last year of misappropriating $1.2 million in bingo revenues. The temple settled for an undisclosed amount.
“The leaders of this organization think it is better to persecute the innocent than to prosecute the guilty,” said Clairence Ballard, a member of Cahaba Shriners in Huntsville, Ala., who found that charitable money raised through bingo was being used to cover fraternal, and perhaps personal, expenses and faced an internal inquiry.
[Richard A. Baumback] became potentate in 2003 and immediately received a personal reminder of flaws in the temple’s financial controls: The $10,000 he had raised the year before to offset expenses he expected as potentate was gone, tapped by his predecessor to cover temple deficits. “He told me that was the way the system worked,” Mr. Baumbach said.